Principles for the Development of Coal Chemical Sector: Scientific Layout, Leading Technology, Cogeneration with High Efficiency, Clean and Low Carbon, and Normative and Orderly





By Li Yongwu, Director of China Petroleum & Chemical Industry Federation



1. The industrial development has made a breakthrough



The coal chemical is an important basic sector of chemical industry. In recent years, China’s modern coal chemical sector has made a breakthrough progress, and has been at the forefront of the world in the technology innovation and industrialization. The demonstrative coal-to-liquid and methanol-to-olefin projects have achieved stable operation, playing a positive role in speeding up the process of raw material diversification and ensuring the national energy security.

At present, the development of China’s modern coal chemical sector shows the following four characteristics:

(1) Rapid growth of the industrial scale.

In 2013, China produced 29.0 million tons of methanol and 5.0 million tons of dimethyl ether. China’s output of coal-to-liquid and coal-to-olefin was around 1.7 million tons and 1.8 million tons, respectively. China’s capacity of coal-to-mono ethylene glycol and coal-to-natural gas demonstration projects being put into production was 900 kt/a and 2.7 billion cubic meters per annum (bcm/a), respectively. At present, a number of coal-to-liquid and coal-to-natural gas demonstration projects as well as coal-to-olefin upgrading demonstration projects approved by the state are under construction. It is expected that by 2020, the scale of coal-to-liquid and coal-to-natureal gas will reach 30 million tons and 50 bcm/a, respectively.

(2) Demonstration projects have made a significant progress

At present, a number of demonstration projects such as coal-to-liquid, methanol-to-olefin and coal-to-dimethyl ether have been completed and put into operation, and achieved a stable operation. In 2013, the direct coal-to-oil demonstration project of Shenhua Group in Ordos of Inner Mongolia produced 870 kt of oil products and reaped RMB400 million of profit. Shenhua Baotou coal-to-olefin demonstration project produced 550 kt of polyolefins and realized RMB1.0 billion of profit. The indirect coal-to-liquid project of Inner Mongolia Yitai Group Co., Ltd. produced 180 kt of oil products and reaped RMB200 million of profit. In addition, the projects such as the coal-to-mono ethylene glycol project of Inner Mongolia GEM Chemical Co., Ltd., the coal-to-dimethyl ether project of Inner Mongolia XinAo Group Co., Ltd., and Datang International Keshiketeng Coal Gas Co., Ltd.’s first phase coal-to-natural gas project have been completed and put into operation.

(3) The industrial concentration has improved obviously

Under the guidance of national industrial planning, the modern coal chemical projects are mainly located in regions like Inner Mongolia, Shanxi province, Shaanxi province, Xinjiang and Ningxia. Meanwhile, a large number of backbone enterprises have been cultivated, and the industrial pattern consisting large industrial bases has preliminarily formed. Taking methanol for example, China has formed ten extra-large produces each having a capacity of at least one million t/a, including Shanxi Jincheng Anthracite Coal Mining Group, Shenhua Group, Henan Coal Chemical Industry Group Co., Ltd., Yankuang Group Co., Ltd. and CNOOC, and the combine capacity to make methanol of these ten largest producers accounts for 37% of the national total. In particular, the coal chemical sector in Inner Mongolia has shown a transition from demonstration project to demonstration base, and the development towards industrialization, large-scale and cluster is brisk.

(4) R&D of key technologies and equipment has achieved new breakthroughs.

China has conducted the independent R&D of technologies such as the large-scale advanced coal gasification, coal-to-methanol, direct and indirect coal-to-liquid, coal-to-olefin, coal-to-mono ethylene glycol, 10-thousand-ton annual production of coal-to-aromatic hydrocarbon, low rank coal utilization according to the quality, and conversion of synthetic gas, developed large-scale equipment like the large-scale coal gasification unit, transformation furnace, low-temperature methanol washing unit, large-scale air separation unit with a capacity of at least 120 kt/a, air compressors with a capacity of over 80 kt/a, 1-million-ton annual production of coal-to-liquid reactor and 600 kt/a methanol-to-olefin reactor, and achieved a large number of scientific and technical achievements with independent intellectual property rights.



2. There is an urgent need to strengthen guidance and optimize the industrial layout



However, players should also see clearly that China’s modern coal chemical sector still faces the prominent contradictions such as overheated investment, immature technology, unstable operation, and unsound policies and standards. The modern coal chemical sector, which is still in the primary stage of development, urgently needs to strengthen guidance, optimize the layout, strengthen innovation and improve efficiency, boost all kinds of demonstration projects to generate sound economic and social returns, and promote the sustainable and healthy development of the sector.

At present, the international and domestic environments for the development of the petroleum and chemical industry have changed greatly. The international economy will remain a low speed growth in a long time. The growth of China’s petroleum and chemical sector will shift to a medium speed; overcapacity will jeopardize many enterprises’ profit level; the growth of the sector will also be slowed down by constraints from the rising costs including raw materials and labor force, as well as from the increasing stringent safety and environmental protection regulations. Therefore, the development of the sector will rely more on technology innovation and consumption expansion rather than on investments. In the first four months of 2014, China’s petroleum and chemical industry remained a stable growth, and accomplished main business income of RMB4.3 trillion, up 7.1% year-on-year, and a profit of RMB265 billion, up 2.2% year-on-year. In the petroleum and chemical industry, the fixed-asset investment rose 14.4% year-on-year to RMB502 billion in the first four months, and the export value reached US$60.47 billion, up 8% year-on-year. The growth rate of the main economic indicators like business income, profit and export decreased from two-digit to one-digit, and the growth of fixed-asset investment also reduced to below 20%. The petroleum and chemical enterprises should take the initiative to adapt to the new normality of the industry’s economic operation, actively adjust the development orientation, accelerate structural adjustment, change the mode of operation, and raise the quality and efficiency of development.



3. Construct large-scale industrial bases



The modern coal chemical sector is a strategic emerging industry encouraged by the state, and the new economic growth power cultivated by the petroleum and chemical industry during the 12th Five-Year Plan period (2011-2015). In the situation of deep adjustment to the global petrochemical industry, the development of modern coal chemical not only accords with China’s resource endowment characteristics, but also can promote the industrial structure adjustment and form a new pattern of innovation driven development in China. At present and a period of time in the future, China’s modern coal chemical sector should adhere to the development principles of scientific layout, leading technology, cogeneration with high efficiency, clean and low carbon, and normative and orderly, make breakthroughs in a number of core technologies with independent intellectual property rights, construct a number of upgrading demonstration projects that can be popularized and promoted, cultivate a number of large enterprises with international competitiveness, and construct a number of large-scale industrial bases with reasonable layout and eco-friendly operation.

(1) Conduct the scientific planning and layout to promote the orderly development of the sector

China should reasonably plan coal chemical demonstration projects, according to the state’s planning of main functional areas and the layout of 13 large-scale coal bases, and synthetically considering factors like environmental capacity, the bearing capacity of resources, market demand as well as transportation conditions. Players should study and formulate strict access standards from the aspects of enterprise scale, technical level, energy consumption, environmental protection, production safety and resource condition to control total capacity, and avoid overheating investment and disorderly expansion.

(2) Strengthen innovation and promote the extension of industrial chain towards high-end

In order to keep up with forefront of international standard, enterprises should become major players of technological innovation to organize and carry out the collaborative R&D of key technologies and major equipment for the modern coal chemical. The development of high-end products like aviation fuel, high-end lubricants, coal-to-aromatic hydrocarbon and downstream special materials should be strengthened. Enterprises in the sector should take effective measures to actively use the domestic equipment, seriously organize the assimilation and re-innovation to the imported technologies and equipment, and promote the standardization and finalization of the modern coal chemical equipment.

(3) Promote the coupling and polygeneration of multiple chemicals, and improve competitiveness

The coupling and integration of many coal chemical technologies can promote the synergistic effect among different sectors, produce a variety of clean fuel, chemical raw materials as well as generate heat power and electricity, and greatly improve the comprehensive utilization of resources. China should encourage the qualified regions to actively promote the coupling and polygeneration of coal chemical with sectors like power generation, metallurgy, cement, calcium carbide, coking, petrochemical and wind energy, construct the modern coal chemical comprehensive industrial cluster with ultra large scale, circular economy and polygeneration, and achieve the maximum benefit.

(4) Strengthen the safety and environmental protection, and promote low-carbon development

Enterprises in the sector should seriously sum up the experiences from the demonstrative projects in the aspects of process technology, engineering magnification, equipment selection and operation management, continuously improve the levels of technology and management, increase the resource utilization efficiency, reduce the pollutant emission, and apparently improve the main technical indicators including energy conversion, resource consumption as well as pollutant emission. They should develop technologies for the treatment of industrial wastes, and conduct the application research of high-efficient membrane technology in the coal chemical sector. Moreover, they should strengthen the development of technologies for the capture, application and sequestration of carbon dioxide, and conduct the experimental works such as carbon dioxide flooding, microalgae absorption and geological sequestration.

(5) Launch the preliminary research of the 13th Five-Year Plan for the coal chemical sector

The 13th Five-Year Plan period (2016-2020) will be the key period for the reform and development of China’s petroleum and chemical industry. Thus both the internal and external environments of the petroleum and chemical industry will experience great changes. The good formulation and implementation of the 13th Five-Year Plan has a great significance in leading the sector to speed up transformation and upgrading. It is suggested that the relevant government departments, industry associations, key enterprises as well as research institutes should jointly participate in the research and compilation of the 13th Five-Year Plan, select the relevant key sectors and conduct in-depth investigation and research, seriously sum up the development situation during the 12th Five-Year Plan period (2011-2015), analyze the opportunities and challenges, analyze the existing problems, put forward the development orientation and policy suggestions for the next five years, and offer a good service for the decision-making of central and governments and enterprises.